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Prelims Pointers for 21-January-2025

by Vajiram & Ravi

21-01-2025

09:32 AM

What are Asset Reconstruction Companies (ARCs)?

21-01-2025

09:32 AM

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1 min read
What are Asset Reconstruction Companies (ARCs)? Blog Image

Overview:

The Reserve Bank of India (RBI) recently issued new rules aimed at streamlining and tightening the settlement process for dues payable by borrowers to Asset Reconstruction Companies (ARCs).

About Asset Reconstruction Companies (ARCs):

  • An ARC is a specialized financial institution that purchases the bad debts of a bank at a mutually agreed value and attempts to recover those debts or associated securities by itself.
  • ARCs help banks clean up their balance sheets by acquiring financial assets from banks and financial institutions through auctions or bilateral negotiations.
  • ARCs are registered under the RBI and regulated under the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (SARFAESI Act, 2002).
  • They function under the supervision and control of the RBI.
  • As per the RBI, ARC performs the functions namely Acquisition of financial assets, Change or takeover of Management or Sale or Lease of Business of the Borrower, Rescheduling of Debts, Enforcement of Security Interest and Settlement of dues payable by the borrower.
  • ARCs take over a portion of the bank's debts, which qualify as Non-Performing Assets (NPAs). Therefore, ARCs are involved in the business of asset reconstruction, securitisation, or both.
  • All the rights previously held by the lender (the bank) in regard to the debt are transferred to the ARC.
  • The required funds to purchase such debts can be raised from Qualified Buyers.
    • Qualified Buyers include Financial Institutions, Insurance companies, Banks, State Financial Corporations, State Industrial Development Corporations, trustee or ARCs registered under SARFAESI and Asset Management Companies registered under SEBI that invest on behalf of mutual funds, pension funds, FIIs, etc.
    • The Qualified Buyers are the only persons from whom the ARC can raise funds.
    • ARCs are prohibited from raising money by way of deposit.
  • To commence the business of securitisation or asset reconstruction, an ARC is required to have a minimum net owned fund (NOF) of Rs 300 crore and thereafter, on an ongoing basis.
  • They are also mandated to maintain a capital adequacy ratio of a minimum of 15% of its total risk-weighted assets.

News Rules issued by the RBI:

  • The revised framework by the RBI mandates that ARCs adopt a more structured approach to settle dues while ensuring transparency and accountability in their operations.
  • As per the new guidelines, every ARC must establish a Board-approved policy  that governs the settlement of borrower dues.
    • The policy is required to address critical aspects such as eligibility criteria for one-time settlements, permissible sacrifices based on exposure categories, and methodologies to determine the realisable value of securities.
  • For borrowers with outstanding dues exceeding Rs 1 crore, settlementscan only proceed after a thorough evaluation by an Independent Advisory Committee (IAC).
    • This committee has to comprise experts with technical, financial, or legal expertise, who will assess the borrower’s financial position, projected earnings, and recovery prospects before making recommendations to the ARC.
    • Further, the Board of Directors, including at least two independent directors, must deliberate on the IAC’s recommendations and evaluate alternative recovery options.
    • The Board’s decision, along with the rationale, must be meticulously documented in meeting minutes.
  • For dues of Rs 1 crore or below, ARCs can process settlements based on criteria defined in the Board-approved policy.
  • However, officials involved in acquiring the financial asset cannot participate in the approval of the settlement to prevent conflicts of interest.
  • Additionally, the Board must review quarterly reports detailing trends and recovery timelines for these accounts.
  • The revised framework emphasised on robust reporting requirements, including periodic analysis of accounts settled through compromise
    • This analysis has to include details such as trends in settled accounts, categorisation of fraud and wilful default cases, and recovery timelines.
  • Settlements involving borrowers classified as wilful defaulters or frauds will follow the same stringent procedures applicable to high-value accounts, irrespective of the settlement amount. 
  • ARCs are also required to ensure that settlements comply with existing laws and obtain consent decrees from judicial authorities when recovery proceedings are already underway.

Q1: What is the difference between asset reconstruction and securitisation?

Asset Reconstruction refers to the acquisition of any right or interest of a bank or financial institution in loans, advances, debentures, bonds, guarantees, or any other credit facility extended by banks for the purpose of recovering the funds. These loans, advances, bonds, guarantees, and other credit facilities are collectively referred to as 'financial assistance.' Securitization, on the other hand, means the acquisition of financial assets through the issuance of security receipts to Qualified Buyers or other means. These security receipts represent an undivided interest in the financial assets.

Source: BS


Contract Farming Blog Image

Overview:

India has emerged as a major exporter of French Fries, which owes much contract farming through which companies procuring potato directly from growers and deepening farmer engagement.

About Contract Farming: 

  • It is an agreement between farmers (producers) and buyers in which both agree in advance on the terms and conditions for the production and marketing of farm products.
  • These conditions usually specify the price to be paid to the farmer, the quantity and quality of the product demanded by the buyer, and the date for delivery to buyers.
  • In some cases the contract may also include more detailed information on how the production will be carried out or if inputs such as seeds, fertilizers and technical advice will be provided by the buyer.
  • Advantages to farmers
    • Financial support: Easier access to inputs, services and credit.
    • It will help in improved production and management skills.
    • Secure market or access new markets.
    • It helps in reduction of price-related risks.
    • It will generate more stable income and helps in better planning.
    • Introduction of new technologies.
  • Concerns of farmers
    • Flexibility issue: Loss of flexibility to sell to alternative buyers when prices increase.
    • Possible delays in payments and late delivery of inputs.
    • Risk of indebtedness from loans provided by the buyer.
    • Impact on environment: It creates environmental risks from growing only one type of crop.
    • Unequal bargaining power between farmers and buyers.

Q1: When was the first time contract farming was introduced in India?

In 2003, the Indian government gave first-time official recognition to contract farming and included it in the APMC Act 2003. The act was about making a specialized market where farmers can come and sell their produce.

Source: IE


Midges

21-01-2025

08:30 AM

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1 min read
Midges Blog Image

Overview:

Researchers from the Zoological Survey of India (ZSI) have identified 23 species of blood-sucking flies (Midges), 13 of them recorded for the first time in the country, in the Andaman and Nicobar Islands.

About Midges: 

  • These are tiny insects which are similar in appearance to flies but are more closely related to mosquitoes in their feeding habits.
  • They belong to the Culicoides genus and are locally called bhusi files.
  • Food habit: These flies feed on the blood of livestock such as sheep, goats, and cattle, as well as wild animals like deer.
  • Amongst them five species are known to transmit the bluetongue disease virus which is a condition that can be fatal to livestock.
    • Bluetongue disease manifests through symptoms including blue discolouration of the tongue, fever, facial swelling, and excessive salivation.
    • It can potentially lead to death in affected animals and poses a significant threat to livestock farming and the agricultural economy.
  • The study, conducted in 2022 and 2023, revealed that 17 of the 23 species identified are known to bite humans, although no human disease transmission has been reported.
  • The 13 new species recorded for India are C. barnetti, C. gouldi, C. flaviscutellaris, C. flavipunctatus, C. hui, C. histrio, C. guttifer, C. perornatus, C. okinawensis, C. quatei, C. obscurus, C. coronalis, and C. kusaiensis.
  • The Indian Culicoides fauna now includes 93 valid species, many of which are recognised as confirmed or potential vectors of important pathogens of animal health.

Key facts about Culicoides

  • Distribution: It isa large genus of the family Ceratopogonidae with cosmopolitan distribution excluding New Zealand and Antarctica, includes species that are among the smallest haematophagous members of the order Diptera.
  • The midges of this family are gaining significant attention due to their role as vectors of almost 60 viruses, 40 protozoans, and 24 filarial nematodes, impacting not only livestock and wildlife but also humans.

Q1: What disease is transmitted by midges?

Bluetongue virus is spread by biting midges and causes severe disease in ruminants. Bluetongue virus (BTV) is responsible for causing the severe haemorrhagic disease, bluetongue (BT). It can infect domestic ruminants including cattle, sheep and goats, along with wild animals such as buffalo, deer, antelope and camels.

Source: TH


What is NASAMS (National Advanced Surface-to-Air Missile System)? Blog Image

Overview:

Taiwan recently announced that its newly purchased, cutting-edge, battle-proven National Advanced Surface-to-Air Missile Systems (NASAMS) will be deployed in North Taiwan to protect the capital, Taipei.

About NASAMS (National Advanced Surface-to-Air Missile System):

  • It is a medium-range, ground-based air defense system.
  • It was designed and developed jointly by Raytheon (United States) and Kongsberg Defence & Aerospace (Norway).
  • NASAMS reached operational capability in 1994 and was first deployed by the Royal Norwegian Air Force.
  • The missile system is in service in the armed forces of 13 countries, including Norway, Spain, the US, Finland, Hungary, the Netherlands, Australia, Indonesia, Qatar, Oman, Lithuania, and an undisclosed nation.
  • The NASAMS can be deployed to identify, engage, and destroy aircraft, helicopters, cruise missiles, and unmanned aerial vehicles (UAVs) and to protect high-value assets and mass population centers against air-to-surface threats.
  • It has been integrated into the US National Capital Region’s air defense system since 2005. 
  • Features:
    • It is the world's first networked short- and medium-range air defense system that could integrate with other equipment and air defense systems.
    • It features an X-Band, 360-degree phased array air defense radar with a 75-kilometer (approximately 47-mile) range to identify targets.
    • The NASAMS is armed with three launchers, each carrying up to six missiles.
    • The system can engage 72 targets simultaneously in active and passive modes.
    • It uses AIM-120 AMRAAM air-to-air missiles, which have been modified for ground launch and have an engagement range of about 30 kilometers.
    • It features network-centric, open architecture that provides increased survivability against electronic countermeasures.

Q1: What is the purpose of the surface-to-air missile?

A surface-to-air missile (SAM) is a radar or infrared guided missile fired from a ground position to intercept and destroy enemy aircraft or missiles.

Source: ET


What is Australopithecus? Blog Image

Overview:

Australopithecus had a variable but plant-based diet, according to an analysis of stable isotope data from seven hominin specimens dating back 3.5 million years from Sterkfontein in South Africa.

About Australopithecus:

  • Australopithecus, (genus Australopithecus) is a group of extinct primates known from a series of fossils found at numerous sites in eastern, north-central, and southern Africa.
  • They are the closest known relatives of our genus, Homo.
  • The various species of Australopithecus lived 4.4 million to 1.4 million years ago (mya), during the Pliocene and Pleistocene epochs (which lasted from 5.3 million to 11,700 years ago).
  • The genus name, meaning “southern ape,” refers to the first fossils found, which were discovered in South Africa.
  • Perhaps the most famous specimen of Australopithecus is “Lucy,” a remarkably preserved fossilized skeleton from Ethiopia that has been dated to 3.2 mya.
  • Features:
    • As characterized by the fossil evidence, members of Australopithecus bore a combination of humanlike and apelike traits.
    • Members of this species had apelike face proportions (a flat nose, a strongly projecting lower jaw) and braincase (with a small brain, usually less than 500 cubic centimeters - about 1/3 the size of a modern human brain), and long, strong arms with curved fingers adapted for climbing trees.
    • They also had small canine teeth like all other early humans, and a body that stood on two legs and regularly walked upright
    • They were roughly 1.2-1.5 m tall and probably weighed about 30-50 kg.
    • Males were almost twice the size of females, a level of difference, or sexual dimorphism, greater than modern chimpanzees or humans but less than gorillas or orangutans.
    • They had mainly a plant-based diet, including leaves, fruit, seeds, roots, nuts, and insects.

Q1: How old is mankind?

Fossils and DNA suggest people looking like us, anatomically modern Homo sapiens, evolved around 300,000 years ago. Surprisingly, archaeology – tools, artefacts, cave art – suggest that complex technology and cultures, “behavioural modernity”, evolved more recently: 50,000-65,000 years ago.

Source: SN


What is the National Board for Wildlife (NBWL)? Blog Image

Overview:

The National Board for Wildlife (NBWL) has denied the Uttarakhand government’s proposal for soapstone mining near Kedarnath Wildlife Sanctuary, a habitat for endangered species.

About National Board for Wildlife (NBWL):

  • It is constituted by the Central Government under Section 5A of the Wildlife (Protection) Act, 1972 (WLPA). 
  • The board was constituted through an amendment of the WLPA in 2022.
  • It replaced the Indian Board for Wildlife, which was formed in 1952.
  • NBWL is India’s top-level advisory body to the government on matters pertaining to wildlife conservation, particularly within Protected Areas (PAs).
  • It is responsible for guiding the government’s decisions on matters related to wildlife conservation and issuing approvals for projects in PAs.
  • The WLPA mandates that, without the approval/recommendation of the NBWL, construction of tourist lodges, alteration of the boundariesof PAs, destruction or diversion of wildlife habitat, and de-notification of Tiger Reserves cannot be done.
  • Organisation Structure:
    • It is a 47-member committee, headed by the Prime Minister and the Minister of Environment, Forest, and Climate Change as vice chairperson.
    • In addition to offices and institutions directly involved in conservation and protection of wildlife, the NBWL also has the chief of army staff, defence secretary, expenditure secretary to the Government of India as members.
    • Further, the central government nominates 10 members who are eminent conservationists, ecologists, and environmentalists.
    • The Additional Director General of Forests (WL) & Director, Wildlife Preservation is the Member-Secretary to the Board. 
  • Standing Committee of NBWL:
    • It is an independent body under NBWL.
    • It comprises not more than 10 members of the NBWL.
    • The Minister of Environment, Forest, and Climate Change chairs the Standing Committee.
    • The Standing Committee is completely a project clearance body, while NBWL is a policy decision body that advices and takes part in Central Government’s policies related to wildlife protection.

Q1: Is the National Board for Wildlife (NBWL) a statutory body?

NBWL is a statutory body constituted by the Central Government under Section 5A of the Wildlife (Protection) Act, 1972 (WLPA). 

Source: TOI


Surgical Tele-Robotic System Blog Image

Overview:

India’s first indigenous surgical tele-robotic system, SSI Mantra successfully conducted two complex heart surgeries with a patient in Jaipur and the operating surgeon in Gurgaon.

About Surgical Tele-Robotic System: 

  • SSI Mantra is a robotic system developed by medical technology company, SSI Ltd which is the first-of-its-kind system in India.
  • It has been approved by the Central Drugs Standard Control Organisation (CDSCO) in India under Class B and Class C surgical devices.
    • These approvals affirm the safety, efficacy, and regulatory compliance of the system for use in hospitals across India.
  • It facilitates complex surgery such asTotally Endoscopic Coronary Artery Bypass (TECAB).
  • Advantages: The advantages include reduced time of operation, better precision, minimal operation trauma to the body in terms of incision, blood loss, recovery time and chances of infection.
  • Challenges:
    • Latency time, ensuring good connectivity, anticipating and being prepared for medical and technical problems are the challenges associated with the procedure.
    • It involves higher costs – both capital as well as operating and these facilities are more available in metro and tier-1 cities.

Q1: What is tele robotic surgery?

Telesurgery is an emerging surgical system that utilizes wireless networking and robotic technology to connect surgeons and patients who are distantly located from one another.

Source: TH


What is India-Middle East-Europe Economic Corridor (IMEEC)? Blog Image

Overview:

Former US President Joe Biden highlighted the potential realization of the India-Middle East-Europe Economic Corridor (IMEC) following the Israel-Hamas ceasefire.

About India-Middle East-Europe Economic Corridor (IMEC):

  • It is a connectivity project that seeks to develop a seamless infrastructure of ports, railways, roads, sea lines, and pipelines to enhance trade among India, the Arabian Peninsula, the Mediterranean region, and Europe.
  • It was announced in 2023 on the sidelines of the G20 meeting in New Delhi when a memorandum of understanding (MoU) was signed between the European Union and seven countries, namely India, the US, Saudi Arabia, the United Arab Emirates (UAE), France, Germany, and Italy.
  • The IMEC will comprise two separate corridors, the eastern corridor connecting India to the Arabian Gulf and the northern corridor connecting the Gulf to Europe.
  • Upon completion, the corridor will have a cost-effective and reliable cross-border railway network, which will be supplemented by the available road transport and maritime routes.
  • The corridor will include a shipping route connecting Mumbai and Mundra (Gujarat) with the UAE and a rail network connecting the UAE, Saudi Arabia, and Jordan with the Israeli port of Haifa to reach the shores of the Mediterranean Sea.
  • Haifa will then be connected by sea to the port of Piraeus in Greece to eventually be connected to Europe.
  • In addition, along the corridor, the countries will also lay the network of electricity grids, optical fiber cable for digital connectivity, and pipeline for the transportation of hydrogen gas
  • It intends to increase efficiency, reduce costs, secure regional supply chains, increase trade accessibility, enhance economic cooperation, generate jobs, and lower greenhouse gas emissions.
  • The corridor will be supported by the Partnership for Global Infrastructure and Investment (PGII), a US-led initiative to bridge the infrastructure gap in developing countries. 

Q1: What is the aim of the India Middle East Europe Corridor (IMEC)?

IMEC seeks to develop a seamless infrastructure of ports, railways, roads, sea lines, and pipelines to enhance trade among India, the Arabian Peninsula, the Mediterranean region, and Europe.

Source: ET


Kalarippayattu

21-01-2025

08:30 AM

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1 min read
Kalarippayattu Blog Image

Overview:

Kerala’s martial art form Kalaripayattu has become a bone of contention ahead of the 38th edition of the National Games which is scheduled to commence from January 28 in Uttarakhand.

About Kalaripayattu: 

  • It is one of the oldest and most scientific martial art forms in the world, aimed at mind and body coordination.
  • It originated and is widely practiced in Kerala. The term “Kalari” in Malayalam refers to a traditional gymnasium where this martial art, known as Payattu, is taught. 
  • According to mythology, the warrior sage Parasurama is credited with establishing Kalarippayattu.
  • The four stages of Kalaripayattu are:
    • Maippayattu: It is the body conditioning phase where the person is schooled to prepare their body for a fight. Only after qualifying this stage can the practitioner proceed to the next phase of training.
    • Kolthari: In this stage, a person is taught attack and self-defense with the help of wooden weapons such as short sticks, and long sticks.
    • Angathari: Once the person overcomes the fear of fighting with wooden weapons, sharp metal objects are introduced — in the third stage.
    • Verumkai: This stage includes research-based bare-hand fighting. Students are taught body anatomy so that they know what points they can hit and what they cannot.
  • The main ethnic styles of Kalarippayattu found in the three regions of northern Kerala (Malabar) are: Vattenthirippu Style, Arappukkai Style and Pillathangi Style.
  • It is believed that Kalarippayattu was introduced to China at the Shaolin Temple in the 5th century AD by Bodhidharma, who was originally from Thanjavore, a cultural center that was part of Kerala but is now in Tamil Nadu.

Q1: Who is the father of Kalaripayattu?

Kalaripayattu, which is the most popular amongst many martial arts practiced in India, is believed to have been founded by Parasurama.

Source: IE


Entity Locker Blog Image

Overview:

The National eGovernance Division (NeGD), under the Ministry of Electronics and Information Technology (MeitY) has developed Entity Locker.

About Entity Locker:

  • It is a secure, cloud-based solution that simplifies the storage, sharing, and verification of documents for a wide range of entities, including large organisations, corporations, micro, small, and medium Enterprises (MSMEs), trusts, startups and societies.
  • It is designed to transform the management and verification of business/organisation documents.
  • The platform is a critical component of India’s Digital Public Infrastructure, aligning with the vision of the Union Budget 2024-25 for enhanced digital governance and ease of doing business.
  • It is built on a robust technological framework that integrates with multiple government and regulatory systems,
  • It offers:
    • Real-time access and verification of documents through integration with government databases
    • Consent-based mechanisms for secure sharing of sensitive information
    • Aadhaar-authenticated role-based access management to ensure accountability
    • 10 GB of encrypted cloud storage for secure document management
    • Legally valid digital signatures for authenticating documents
  • Benefits
    • Streamlines document sharing and access with partners and stakeholders
    • Built-in features simplify adherence to regulations and reporting requirements
    • Ensures accountability by tracking all document-related activities
    • Consolidates storage and security to reduce administrative overhead
    • Minimizes document processing times and operational bottlenecks
    • Seamless integration with Government organisations
  • It provides seamless integration with systems such as the Ministry of Corporate Affairs, the Goods and Services Tax Network (GSTN), the Directorate General of Foreign Trade (DGFT) and other regulatory institutions that provides businesses instant access to critical documents.
  • It supports various use cases, including: Vendor verification on the procurement portal, expedited loan applications for MSMEs, FSSAI compliance documentation, vendor verification during registration in GSTN, MCA and tendering process, streamlined corporate annual filings

Q1: What is the entity locker?

The entity-Locker is a secure online document storage and sharing platform for MSMEs, large businesses, society and charitable trusts.

Source: PIB